The CFPB issued a final rule to amend Regulation X (Real Estate Settlement Procedures Act) to assist mortgage borrowers affected by COVID-19. The final rule assists borrowers in having opportunities to be reviewed for loss mitigation before a servicer can begin foreclosure of certain mortgages. The final rule includes five key amendments to Regulations X, all of which encourage borrowers and servicers to work together to facilitate review for foreclosure avoidance options:
- Ensures borrowers have a meaningful opportunity to be reviewed for loss mitigation by establishing temporary special COVID-19 procedural safeguards that must be met for certain mortgages before the servicer can make the first notice or filing required by applicable law for any judicial or non-judicial foreclosure process because of delinquency.
- Permits servicers to offer certain streamlined loan modification options made available to borrowers with COVID-19 related hardships based on the evaluation of an incomplete loss mitigation application.
- Amends the early intervention obligations to help ensure that servicers communicate timely and accurate information to borrowers about their loss mitigation options during the current crisis.
- Clarifies servicers’ reasonable due diligence obligations when the borrowers are in a short-term payment forbearance program made available to a borrower experiencing a COVID-19 related hardship based on the evaluation of an incomplete application.
- Defines COVID-19 related hardship to mean a financial hardship due, directly or indirectly, to the national emergency for the COVID-19 pandemic declared in Proclamation 9994 on March 13, 2020 and continued on February 24, 2021, in accordance with section 202(d) of the National Emergencies Act (502 U.S.C. 1622(d)).
The final rule is effective August 31, 2021 through December 31, 2021.
Review the Final Rule